The Best Buy sign at its store in Richfield, down the street from the company's headquarters.

David Joles, Dml - Star Tribune

Best Buy closes 15 stores in Canada

Article by: STEVE ALEXANDER

Star Tribune

February 1, 2013 - 12:14 AM

Best Buy Co. said Thursday it has closed 15 of its 230 big-box retail stores in Canada, citing a variety of economic factors and a desire to shift toward smaller stores.

The company declined to say how many workers were laid off as a result of the closings, which included seven Best Buy stores and eight Future Shop locations owned by Best Buy. The closures come as the Richfield-based retailer is restructuring its U.S. operations, where it has already shut 53 locations in the last year.

Underperforming sales at some stores and real estate pressures led to the closures in Canada, Best Buy officials said Thursday. The decision is also part of a broader effort to transform its retail operations to include stores that are about a quarter of the size of a big-box retail store. The Canadian operations currently have 42 smaller Best Buy Mobile stores and a prototype of a smaller Future Shop, another big consumer electronics chain in Canada.

"In the next 36 months, we plan to increase the number of Future Shop and Best Buy Mobile store locations in Canada," said Best Buy Canada spokesman Christopher Bennett. Best Buy declined to provide any details of store closing plans in either the U.S. or Canada.

Best Buy is shifting to a smaller format in large part because consumers are buying fewer TVs, DVDs and computers in physical stores. Instead, they have shifted those purchases to the Internet and often use retailers like Best Buy to window shop for items they end up buying online, a phenomenon called "showrooming." While Best Buy didn't attribute the latest closings to Internet shopping, one analyst said that likely played a role.

"Why, when you can order online and have the product delivered to your door, would you go through the pain of navigating a big box store? Best Buy has a choice -- they can either wind down their big box strategy or become irrelevant," said Doug Stephens, a retail consultant in Toronto. He estimated that up to 900 workers lost their jobs as a result of the closures.

The problem for Best Buy may be that its shift to smaller stores is not a bold enough move to reignite sales that have been hurt by the "showrooming," Stephens said. "Everyone is waiting for Best Buy to do something revolutionary to reinvent itself, but that has not happened," he added.

Best Buy Canada, which has 20,000 employees, is a wholly owned subsidiary of Best Buy Co. The Canadian operations are Best Buy's biggest non-U.S. presence. Best Buy emphasized that the 15 store closures in Canada were separate from Best Buy's store closure plans in the U.S.